Resolving Card Disputes with Pre-chargeback

Pre-chargeback is a chargeback prevention solution that helps merchants prevent and minimize credit card chargebacks. This service allows merchants to identify and resolve disputes before they become chargebacks, safeguarding revenue, enhancing customer satisfaction, and reducing operational costs and penalties associated with chargebacks.

For many businesses engaged in online sales of goods and services, chargebacks can pose significant challenges:

• Substantial chargeback fees may be incurred regardless of the outcome of the dispute. Even if you win the dispute, you are still responsible for paying processing fees associated with the chargeback.
• Businesses often lose disputes, with rulings frequently favoring the cardholder.
• Handling disputes requires valuable time and resources.

Pre-chargeback can mitigate these challenges, often by automatically refunding disputed transactions at a much lower cost than regular chargebacks.

Visa Rapid Dispute Resolution (RDR)

Visa's Rapid Dispute Resolution (Visa RDR) service helps merchants manage and monitor chargebacks more effectively. By automating the dispute process, RDR enables merchants to address chargebacks promptly, reducing both the time and complexity involved. This is particularly beneficial for businesses with prolonged chargeback processes.

Visa RDR resolves disputes on Visa card transactions through automated refunds based on predefined rules. When a shopper disputes a transaction with their issuing bank, Visa evaluates whether the dispute meets the threshold rules set by RDR. If it falls below the threshold, the transaction is automatically refunded before escalating into a chargeback.

Disputes resolved via RDR are categorized as Pre-chargeback disputes in SHOPLINE Payments emails and automatically labeled as Auto-Refunded via Pre-Chargeback. While resolving disputes through RDR incurs a service fee (determined by your merchant category), it helps avoid the higher costs associated with standard chargebacks from SHOPLINE Payments.

If your business falls under certain merchant categories, SHOPLINE Payments will automatically enroll you in RDR. The RDR service, provided by Visa subsidiary Verifi, determines the automatic chargeback threshold based on your business type and risk profile. Any changes to these thresholds will be communicated to you by the SHOPLINE Payments team.

Without using the Pre-chargeback chargeback alert service, merchants risk losing goods and incurring chargeback service fees when chargebacks occur. By implementing the chargeback alert service, timely responses can prevent chargeback fees, minimizing financial losses.

Mastercard Collaboration

Mastercard Collaboration is a program designed to address cardholder disputes in the early stages of the chargeback process. It aims to improve communication between issuers, acquirers, and merchants, leading to faster dispute resolution and reduced costs.

Mastercard Collaboration allows you to address disputes related to Mastercard transactions through pre-chargeback alerts, preventing them from escalating into chargebacks. Incoming dispute events will be displayed in SHOPLINE Payments emails as Pre-chargeback. 

If the dispute amount is below a predetermined threshold, Mastercard Collaboration will automatically respond and issue a refund. You will see it marked as Accepted. For disputes exceeding the threshold, you'll receive a Received Pre-Chargeback Notification and need to confirm the next steps. If no response is provided within a designated period, the dispute will be automatically accepted and refunded.

Regarding Mastercard Collaboration, please also note the following:

• Unlike Visa RDR, disputes exceeding the threshold will not automatically become chargebacks. You have a 60-hour window to decide whether to accept the dispute.
• If you accept the dispute within 60 hours or miss the window, the transaction will be refunded, and the dispute will be marked as Accepted in the pre-chargeback stage.
• If you choose not to accept the dispute, it will escalate to a chargeback, marked as Response Required in the chargeback stage (please note that this incurs chargeback fees).

Currently, Mastercard does not disclose the reason for the shopper's dispute when submitting collaboration cases. Therefore, we label the dispute as Unknown.

Frequently Asked Questions

1. How does the Pre-chargeback program work?

If your business falls into certain merchant categories, SHOPLINE Payments will automatically enroll you in the Pre-chargeback program. SHOPLINE Payments will determine the threshold for automatic Pre-chargeback refunds based on your business type and risk profile. You will be notified of any changes to this threshold.

2. Will transactions initiated by shoppers for Pre-chargeback that exceed the originally set threshold be refunded?

Visa RDR: If the transaction amount exceeds the threshold, it will NOT be automatically refunded.

Mastercard Collaboration:

• • If the transaction amount exceeds the threshold, you have a 60-hour window to decide whether to accept the dispute.
  • If you accept the dispute within 60 hours or miss the deadline, the transaction will be refunded, and the dispute will be marked as Accepted in the Pre-chargeback stage.
  • If you choose not to accept the dispute, it will escalate to a chargeback, marked as Response Required in the chargeback stage (please note that this means you will incur chargeback fees).

3. Can the refund threshold set by Pre-chargeback be modified?

No, the refund threshold is determined by the SHOPLINE Payments risk control team and cannot be directly modified by merchants.

4. For transactions that have already undergone Pre-chargeback and have been refunded, will chargebacks still occur?

In some cases, the issuing bank may initiate a chargeback before receiving the refund response for Pre-chargeback. If this happens, SHOPLINE Payments will automatically respond to the chargeback dispute on behalf of the merchant, providing the refund information as evidence. This eliminates the need for manual intervention by the merchant. However, it's important to note that the merchant will still incur chargeback fees in this scenario.

5. If a dispute is not refunded through the Pre-chargeback process, will Pre-chargeback fees still be incurred?

The fees vary depending on your business location. For detailed information, please contact your account manager.

6. Will transactions that have undergone Pre-chargeback be included in my chargeback rate calculations?

No, transactions labeled as Pre-chargeback will not be included in your chargeback rate calculations.